The 30-year fixed-rate mortgage averaged 5.54% in the week ending July 21, up from 5.51% the week before, according to Freddie Mac. That is significantly higher than this time last year when it was 2.78%.
“The housing market remains sluggish as mortgage rates inch up for a second consecutive week,” said Sam Khater, Freddie Mac’s chief economist. “Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably.”
Higher rates have put a dent in mortgage demand, as loan applications dropped to the lowest level in 22 years, according to the Mortgage Bankers Association.
“The weakening economic outlook, high inflation, and persistent affordability challenges are impacting buyer demand,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
All eyes on the Fed
The Federal Reserve does not set the interest rates borrowers pay on mortgages directly. Rates tend to track 10-year US Treasury bonds. But mortgage rates are indirectly impacted by the Fed’s actions on inflation. As investors see or anticipate rate hikes, they often sell government bonds, which sends yields higher and with it, mortgage rates.
As a result, the spread between the 2-year and 10-year Treasuries moved even deeper into negative territory this week.
Click Here to Read the Full Original Article at CNN.com – RSS Channel – HP Hero…